What is income protection insurance? The name has been muddied by companies advertising redundancy/sickness plans and naming them ‘income protection’. There are major differences and it is important that these are understood..

Day Cooper Adams leaves hundreds facing losses

It was only a matter of time before one these compensation firms went under owing money to clients.

Apart from the fact that using them gives little advantage to the claimant it means that the claimant who has a legitimate claim ends up not being fully compensated die to their fees.
This firm took fees up front and apparently FOS paid compensation to this firm which was never passed on.

This where FOS and FSA have dropped the ball.
NO IFA can can handle client money without some very strict regulations and protections in place.

Long Term Incapacity is something that happens to other people, or is it?

People understand that the State is unable to provide enough financial support during incapacity, but do they fully understand the limitations involved?  Many do not financially plan for this risk, which may be a big misconception - Incapacity and Disability benefits are low and in addition, the claimants would have to pass strict tests to qualify for long-term benefits.  

People also fail the Personal Capability Assessment, meaning the individual would not qualify for the Incapacity Benefit and would have to find a means of income from elsewhere. Not everyone is entitled to the benefits either; it is dependent on their personal circumstances and whether they have contributed enough National Insurance.  Even if they do qualify for the benefit, the payment may not even cover the weekly shopping bill, let alone all the other every-day financial commitments.

Of course, in the event of incapacity there are other options that may help, like utilising savings or looking to family for support, but it is very unlikely that they would be in a position to provide hassle free long-term adequate support for you.  

In the event of long-term sickness or an accident, how would you cope with the majority of your income disappearing? How would you pay the bills for shopping, telephone, gas electricity, your car, your mortgage and all the other household items as well things like days out and holidays?  An Income Protection Plan could pay up to 60% of your gross earnings, tax free, to help in covering these costs.

Fortunately there is a solution to such a major problem and to describe it as major is not to exaggerate, if you do not have a fallback position. The answer is Income Replacement Cover (known as Permanent Health Insurance). Allow me to explain some of the details of Income Replacement Plans.

There are three components to an Income Replacement Plan. Firstly, the Deferred Period chosen before income commences, secondly, the amount of Benefit required and thirdly the Selected Retirement Age.

The level of premium for the required amount of benefit will depend on the type of plan and the company chosen.  Some companies' offer guaranteed fixed premiums; other plans reserve the right to review premium levels. For a slightly higher premium the option is normally available to have the level of benefit automatically increased each year, in order to provide protection against the effects of inflation.

An important aspect of the plan for a claim to become payable, is the basis on which it will be considered. An own occupation basis is clearly preferable to a definition of disability that requires the inability to carry out any occupation. There are other definitions, which can also apply. The two other main factors affecting premiums are the deferred period chosen before benefit can commence and the selected retirement age. The deferred period options are typically 1, 3, 6 or 12 months (or split periods), and the selected retirement ages are between 50 and 65, with a few companies offering age 70.

The most important advantage of an Income Replacement plan is that once it is in force, it cannot be cancelled (assuming you continue to pay the premiums) and you can claim on as many occasions as necessary. Potentially a plan can pay out benefit, index linked each year continuously through to the retirement age of the life assured. Even a modest plan could potentially pay out a significant amount of money over its term.

The original question was:
Long Term Incapacity is something that happens to other people, or is it ?

The main question to ask yourself is:

How will I cope without an adequate income ?

Whether you are employed or self-employed, if you would like to know more please get in touch, naturally without obligation.

David Barnett IFA MIFP

DPB Independent Financial Services
David P. Barnett MIFP Principal    
Tel/Fax No. 020 8958 9938
21 Highview Avenue,
Edgware,
Middx,
HA8 9TX    
Mobile No. 07956 227 691
e-mail: ifa@DPBarnett.com
www.investments-in-mind.com

  DPB Independent Financial Services is an Appointed Representative of Sesame Ltd.,
  which is authorised and regulated by the Financial Services Authority.

Travel insurance is intended to cover medical expenses, financial loss
(such as money invested in non refundable payments), and other losses.

Only around 60 countries in the world will offer free medical assistance to UK residents abroad. Medical treatment in many countries will result in you facing a large bill.

Things can and do go wring whilst traveling. You can not assume that airline or tour operator will reimburse or fix problems.

To be certain of reimbursement for lost luggage, cancellations and delays you must take out a Travel Insurance policy that covers all these situations.

There are providers who will provide policies for particular type of
holidays such as a backpackers policy, a skiing/snowboarding policy ones
that cover a single trip or a policy that is an annual comprehensive cover
all policy.

You need to be clear about the type of policy you want especially if you
are undertaking anything other than a normal two week package holiday.

It can often be effected at the time of booking to cover that specific
trip and will only last for the duration of the trip.

A more extensive, continuous insurance can be arranged though insurance
companies, travel agents or directly or tour operators. However, travel
insurance purchased from travel agents and operators tends
to be less inclusive than insurance offered by an insurance company.

The risks covered by most travel insurance policies will include :

• Expenses incurred for medical treatment
• Evacuation or repatriation home
• Overseas funeral expenses
• Accidental death, injury or disablement .
• Loss, theft or damage to personal possessions and money
• Lost or misdirected baggage requiring emergency replacement of essential items
• Legal assistance
• Personal liability cover and rental car damage excess fees.
• Cancellation of flights or travel arrangements.
• Curtailment of holiday arrangements
• Delays or postponements in departure

Some travel policies will also provide cover for additional costs, however these vary widely between insurance providers.

It is also possible to pay for extra cover if required to cover e.g.

• pre-existing medical conditions.
• sports activity with an element of risk.
• travel to high risk countries

Common Exclusions that are made in Travel Insurance policy terms and
conditions.:

• pre-existing medical conditions
• war or terrorism - but some plans may cover this risk expenses related to pregnancy
• illness injury or other loss caused by alcohol or drug use

Travel insurance may also cover some very useful extra services such as
emergency contact services, travel help and a concierge service often 24
hours per day 7 days per week.

For most people fortunately incidents like medical emergencies, baggage
loss, accidents are rare occurrences that do not effect their holiday.
However for those who are misfortunate enough to need their travel
insurance policy will prove to be the best holiday investment they have
ever made.